BMI View: Escalating tensions between Sudan and South Sudan put at risk prospects of economic recovery in 2013. Elevated inflation levels will keep consumer purchasing power depressed, while the government spending will remain largely constrained by the pressing security needs. Although our outlook for South Sudan is somewhat more positive in the long-term, it will have to address major security, political stability and economic diversification challenges. In line with our political and economic assessment of Sudan and South Sudan, our outlook for the food and drink industry remains fairly pessimistic for the forecast period.

In Sudan, private consumption constitutes an estimated 84% of GDP, compared with a global average of 64.1% and a Sub-Saharan Africa average of 69.5%. As a result, factors affecting private consumption have an outsized affect on headline GDP for the country. In May 2013, price growth stood at 37.1% year-onyear in May, down from 43.5% in January. While inflation levels are expected to start flattening over the next several quarters, high inflation will continue to weigh on the consumer spending power in Sudan.